CFD holding costs

Share

If you hold any position after 17:00 New York time, you will be charged a holding cost, or if the position has a fixed expiry the cost is built into the price of the product.

We calculate the holding rate applicable to the holding cost based on the interbank rate of the currency in which the product is denominated. For example, the Australia 200 is based on the Banker Acceptance Bill 1 month rate. For buy positions, we charge 2.5% above this rate. For sell positions you receive this rate less 2.5%, unless the underlying interbank rate is equal to or less than 2.5%, in which case sell positions may incur a holding cost and will be deducted from your account.

Shares

Holding rates for share CFDs are based on the underlying interbank rate for the currency of the relevant share (see table below), plus 2.5% on buy positions and minus 2.5% on sell positions.

Holding costs are charged for buy positions and credited for sell positions, unless the underlying interbank rate is equal to or less than 2.5%, in which case sell positions may incur a holding cost charge that will be deducted from the cash in your account. Holding rates for sell trades may also include an additional adjustment for borrowing fees on shares that attract a higher borrowing cost in the underlying market. These borrowing fees can be significant and are subject to large changes as short interest in a stock increases. Please be aware of this additional risk/charge when holding sell trades in individual shares.

Indices

Holding rates for index CFDs are based on the underlying interbank rate of the index (see table below) plus 2.5% on buy positions and minus 2.5% on sell positions.

Holding costs are charged for buy positions and credited for sell positions, unless the underlying interbank rate is equal to or less than 2.5%, in which case sell positions may incur a holding cost charge.

Holding costs for shares & cash indices

Currency

Interbank rate

AUD

One month banker acceptance bill

CAD

One month banker acceptance bill

CHF

One month Libor

DKK

One month Copenhagen interbank offered rate

EUR

One month Euribor

GBP

One month Libor

HKD

One month Hong Kong interbank offered rate

INR

One month deposit

JPY

One month Libor

NOK

One month Norwegian interbank offered rate

NZD

One month Bank bill

SEK

One month Stockholm interbank offered rate

ZAR

One month deposit

SGD

One month Singapore interbank offered rate

USD

One month Libor

Foreign exchange

Holding rates for FX CFDs are based on the tom-next (tomorrow to next day) rate in the underlying market for the currency pair and are expressed as an annual percentage.

Different rates are quoted for buy and sell positions and are actively traded between banks. Tom-next rates in the underlying market are based on the interest rate differential between the two currencies. As a general rule, if the interest rate of the first named currency is higher than the second named currency in the pair (subject to the 1% adjustment detailed above), and you hold a buy position, the holding cost will be credited to your account. Conversely, if you hold a sell position in this scenario, the holding cost will be debited from your account.

Commodities and treasuries

Holding rates for cash commodity and treasury CFDs are based on the inferred holding costs built into the underlying futures contracts, from which the prices of our cash commodity and treasury products are derived. A cash price is a product without a fixed expiry or settlement date. The price of our cash commodity and treasury products strips out this inferred holding cost (as described above) to create our continuous ‘cash’ price. The inferred daily holding cost is then applied as our holding cost, which can be positive or negative.

Our cash commodities and treasuries provide clients with the convenience of being able to trade on a continuous price that, unlike forward commodities or treasuries, are not subject to an expiration date.

Using the underlying futures price data as a basis, our automated pricing engine calculates theoretical cash prices for each cash commodity and treasury by adding or subtracting (as applicable) the implied holding cost. Using these theoretical cash prices as a basis our automated pricing engine derives price depth ladders containing up to ten levels of depth for each cash commodity and treasury. Each level transparently displays the volume obtainable at a distinct price, with the volume and the applicable spread increasing as you go further down the ladder.

The implied holding cost, plus or minus a haircut, is then applied daily to positions held at 5pm (New York time) as a daily holding cost amount.

The price of our cash product is based on the nearest most liquid futures contract, or primary contract, so over time as the underlying futures approach expiry the primary contract will change, which generally coincides with the roll dates of our forward instruments.

Before each change in the primary contract the implied holding cost rate is calculated, and fixed, measuring the difference between the mid-price of the 'next' primary contract and the mid-price of our current cash price. Each time we update our primary contract the holding cost rate is recalculated to reflect this change.

Simplified calculation used to generate the holding cost rate price for cash commodities and treasuries

Subtract the mid-price of the current cash price from the mid-price of the next primary contract to get the price difference;

Calculate the number of days to expiry between the next primary contract and now;

Divide the price difference by the number of days to expiry and multiply by 365 to get the annualised difference in price terms;

Divide the annualised price difference by the cash price to work out the percentage mid-rate, and;

Bid or long position = (Percentage mid-rate + (maximum of (absolute of the percentage mid-rate x the haircut) or 0.25%)) x -1
Ask or short position = (Percentage mid-rate – (maximum of (absolute of the percentage mid-rate x the haircut) or 0.25%)) x -1

The haircut used to generate the price for cash commodities and treasuries is the mid-rate +/- 2.5%.

Example (illustrative purposes only)

The UK Crude primary contract moved from June to July on 28 April at approximately 9.30pm (UK time).

Forward contracts

A forward contract is a product with a fixed expiration or settlement date, upon which open positions will be settled at the closing price.
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Index, FX, commodity and treasury forward contracts are not subject to holding costs.

Investing in CMC Markets derivative products carries significant risks and is not suitable for all investors. You could lose more than your deposits. You do not own, or have any interest in, the underlying assets. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Spreads may widen dependent on liquidity and market volatility.

The information on this website is prepared without considering your objectives, financial situation or needs.

Consequently, you should consider the information in light of your objectives, financial situation and needs. CMC Markets Asia Pacific Pty Ltd ABN 11 100 058 213, AFSL No. 238054 (the derivative product issuer), CMC Markets Stockbroking Limited, Participant of the ASX Group (Australian Securities Exchange) and SSX (Sydney Stock Exchange) and Chi-X (Chi-X Australia), ABN 69 081 002 851, AFSL No. 246381 (the stockbroking services provider) provides the financial products and/or services. It's important for you to consider the relevant Product Disclosure Statement ('PDS') and any other relevant CMC Markets Documents before you decide whether or not to acquire any of the financial products. Our Financial Services Guide contains details of our fees and charges. All of these documents are available at cmcmarkets.com.au or you can call us on 1300 303 888.

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